A01826 Memo:

NEW YORK STATE ASSEMBLYMEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)

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BILL NUMBER: A1826D
SPONSOR: Cusick (MS)
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PURPOSE OR GENERAL IDEA OF BILL:
This bill would provide incentives in the form of tax credit for
donations to public education entities, local education funds, school
improvement organizations and educational scholarship organizations, as
well as tax credits for certain expenses incurred by qualified educators
who purchase materials and supplies for classroom use.
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SUMMARY OF SPECIFIC PROVISIONS:
Section one of this bill provides the short title, which is the "educa-
tion investment incentives act."
Section two of this bill provides the legislative findings and intent.
Section three of this bill adds new section 41 to the Tax Law, which is
the education investment tax credit. New section 41 provides a tax cred-
it to individuals and businesses paying the Article 22 personal income
tax and to businesses paying the Article 9-A corporate franchise tax for
qualified contributions to public education entities, school improvement
organizations, local education funds, and educational scholarship organ-
izations. Prior to making a contribution, a taxpayer must apply to the
Department of Taxation and Finance ("DTF") for a contribution authori-
zation certificate, which will list the amount of the authorized
contribution and the entity, public school (but shall not Include a
charter school) or public school district for which the contribution is
authorized. Taxpayers have from the issuance of the contribution author-
ization certificate until November 30th to make the contribution to the
named entity, public school, or public school district. Upon receipt of
a timely authorized contribution, the recipient entity will issue a
certificate of receipt to the taxpayer. If a contribution Is not timely
received, the recipient named in the contribution authorization certif-
icate will notify DTF. The amount of the authorized
contribution will be added to the maximum amount of credit available in
the immediately following calendar year.
The maximum amount that a taxpayer may list in the application filed
with DTF is up to $1 million, which also is the maximum amount of aggre-
gate credits that a taxpayer may claim for any year, after the applica-
tion of all other allowable credits, in which the tax return is filed,
plus any amount carried over from a prior year. A taxpayer can claim as
a credit 75 percent of the donation made to an eligible entity. Any
amount of qualified contributions in excess of the taxpayer's tax for
the taxable year may be carried forward.
The credit is capped at $150 million for calendar year 2015, $225
million for calendar year 2016, and $300 million plus any amounts
required to be added to the cap due to authorized contributions that
were not timely made for each year beginning in calendar year 2017. One
half of the annual cap will be available for qualified contributions
made to public education entities, school improvement organizations and
local education funds and one half of the annual cap will be available
for donations to educational scholarship organizations.
Section three of this bill also provides definitions for terms such as
"authorized contribution," "public education entity," "local education
fund," and "educational scholarship organization."
Section three also provides reporting requirements for public education
entities, including school improvement organizations (i.e., a non-profit
entity supporting public schools); local education funds; and educa-
tional scholarship organizations, as well as a joint report from the
Commissioner of Tax and Finance and the Commissioner of Education. The
joint report shall Include, among other things, statistics regarding the
number of qualified contributions made to each type of recipient the
distribution of the recipients by county, and the aggregate amount of
credit claimed.
Section four of this bill amends Tax Law section 208(9) (b) by adding a
new subparagraph (21) to provide that If a taxpayer claims a charitable
contribution deduction at the federal level for any amount claimed as a
credit pursuant to Tax Law section 210(45), such amount must be added
back to the taxpayer's entire net income computation in order to prevent
obtaining a state tax deduction and state tax credit from the same
donation.
Section five of this bill amends Tax Law section 210 to add a new subdi-
vision (48) to provide the mechanism for Article 9-A taxpayers to claim
the education investment tax credit.
Section six of this bill amends Tax law section 606(i)(1)(B) to add a
new clause ()cowl') to provide the mechanism for S Corporations to claim
the education investment tax credit.
Section seven of this bill amends section 606 of the Tax Law to add a
new subsection (w) to provide the classroom Instructional materials and
supplies credit for people employed at a public or non-public school.
The amount of the credit is the lesser of $200 or 100% of the amounts
used to purchase Instructional materials and supplies for use in a
classroom.
Section eight of this bill amends Tax Law section 606 by adding a new
subsection (xx) to provide the mechanism for Article 22 taxpayers to
claim the education investment tax credit.
Section nine of this bill amends Tax Law section 615(c) by adding a new
paragraph (9) to provide that if a taxpayer claims a charitable contrib-
ution deduction at the federal level for any amount claimed as a credit
pursuant to section 606(xx), such amount must be added back to the New
York adjusted income computation in order to prevent obtaining a state
tax deduction and state tax credit from the same donation.
Section ten of this bill amends the Education Law to add a new Article
25, entitled the "Education Investment Tax Credit Program." This new
article provides the framework for public education entities, school
improvement organizations, local education funds and educational schol-
arship organizations to apply for authorization to issue certificates of
receipt. Authorized entities receiving tax-credited donations must
submit an annual report in a form and manner required by the state Board
of Regents. Additionally, any authorization granted may be revoked by
the Regents for violations of applicable law.
This new article contains the same short title and definitions, as well
as the joint report requirement, provided in Tax law section 41, as
added by section three of the bill.
Section eleven of the this bill adds a new section 1503-a to the educa-
tion law to ensure public schools and school districts can accept chari-
table donations and that such donations shall be excluded for the
purposes of determining state aid to public schools.
Section twelve of this bill contains the severability clause.
Section thirteen of this bill provides that this act shall take effect
immediately and apply to taxable years beginning after December 31,
2014.
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EXISTING LAW:
This is a new law.
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JUSTIFICATION:
At a time when the state is considering ways of reducing the tax burden
for New York State residents and educators are seeking an expansion of
financial resources, charitable giving for educational purposes should
be encouraged. Permitting public education entities such as school
districts and individual public schools and non-profits that promote the
arts, civics, and pre-k Instruction, to accept and receive voluntary
cash contributions will lessen the need for additional tax revenue,
encouraging voluntary support for education without prejudice for or
against any state-sponsored educational enterprise.
The provisions of this bill ensure against a taxpayer from taking a
state tax deduction and this tax credit on the same donation, and guard
against a taxpayer having a combined federal and state tax benefit that
exceeds the donation level.
The bill promotes the state's interest in providing the highest quality
education to all children in the state. The tax credit does not consti-
tute public aid to non-public sectarian institutions. This bill also
will enable children from low-income households in high-needs communi-
ties to continue with their education in non-public schools and mitigate
the trend of private school closures, particularly in such areas, the
result of which has added costs to public education, and contributed to
higher property tax burdens and overcrowded classrooms in the state.
Permitting school personnel to claim a credit for the purchase of class-
room Instructional materials and supplies will insure a wider availabil-
ity of such materials and supplies for all students.
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PRIOR LEGISLATIVE HISTORY:
2011-12: A.5081-C, Ways and Means Committee.
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FISCAL IMPLICATIONS:
$150 million for calendar year 2015, $225 million for calendar year
2016, and $300 million for calendar year 2017 and annually thereafter.
This bill would generate $333 million In voluntary contributions to
support K-12 education in New York State based on the credit equaling 90
percent of the charitable donation. Stabilizing the independent and
religious school sector will significantly lessen the need for local
school property tax increases as well as for the issuance of bonds for
new public school construction, generating further savings for the
state. In addition, another $50 million is projected to be forgone
revenue from the instructional and materials supply credit for teachers
and instructional personnel.
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EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning after December 31, 2014.

A. 1826--D 2
1 a. The education of the children of this state is one of the founda-
2 tions of a strong society that requires an academically robust and
3 financially sound school system, both public and non-public;
4 b. At a time when the state is considering ways of reducing the tax
5 burden for New York state residents and educators are seeking an expan-
6 sion of financial resources, charitable giving for educational purposes
7 should be encouraged;
8 c. Permitting public education entities such as school districts and
9 individual public schools to accept and receive voluntary cash contrib-
10 utions will be beneficial to taxpayers and educators;
11 d. Encouraging voluntary support for education, without prejudice for
12 or against any state-sanctioned educational enterprise, promotes the
13 state's interest in providing the highest quality education to all chil-
14 dren in the state;
15 e. The tax credit provided in this act is merely one of many credits
16 available to New York taxpayers;
17 f. The intended beneficiaries of the tax credits provided in this act
18 are the students who attend public schools, students who further their
19 educations using tuition scholarships from educational scholarship
20 organizations, and teachers who purchase with personal funds to supply
21 their students and classrooms, and who seek charitable donations for
22 classroom projects and initiatives;
23 g. Permitting educators to claim a credit for the purchase of class-
24 room instructional materials and supplies will insure a wider availabil-
25 ity of such materials and supplies for all students.
26 § 3. The tax law is amended by adding a new section 41 to read as
27 follows:
28 § 41. Education investment tax credit. (a) Definitions. For the
29 purposes of this section, the following terms shall have the following
30 meanings:
31 1. "Authorized contribution" means the contribution amount that is
32 listed on the contribution authorization certificate issued to the
33 taxpayer.
34 2. "Contribution" means a donation paid by cash, check, electronic
35 funds transfer, debit card or credit card that is made by the taxpayer
36 during the taxable year.
37 3. "Educational program" means an academic or similar program of a
38 public school that enhances the curriculum or academic program of the
39 public school, or provides a pre-kindergarten program to the public
40 school. For purposes of this definition, the instruction, materials,
41 programs and other activities offered by or through an educational
42 program may include, but are not limited to, the following features: (i)
43 instruction or materials promoting health, physical education, and fami-
44 ly and consumer sciences; literary, performing and visual arts; math-
45 ematics, social studies, technology and scientific achievement; (ii)
46 instruction or programming to meet the education needs of at-risk
47 students or students with disabilities, including tutoring or coun-
48 seling; or (iii) the use of specialized instructional materials,
49 instructors or instruction not provided by a public school.
50 4. "Educational scholarship organization" means an entity that (i) is
51 exempt from taxation under paragraph three of subsection (c) of section
52 five hundred one of the internal revenue code, (ii) uses at least ninety
53 percent of the qualified contributions received during the calendar year
54 and any income derived from such qualified contributions for scholar-
55 ships, (iii) provides more than fifty percent of its scholarships during
56 a calendar year to eligible pupils who reside in a household that has an

A. 1826--D 3
1 income not to exceed one hundred fifty percent of the income qualifica-
2 tion required for the reduced price school lunches under the National
3 School Lunch Act, provided however, for the purposes of an educational
4 scholarship organization fulfilling such requirement, an educational
5 scholarship organization may enter into an agreement with another educa-
6 tional scholarship organization or organizations to jointly report their
7 scholarship information to meet such requirement, (iv) provides scholar-
8 ships to eligible pupils for use at not fewer than three qualified
9 schools, (v) deposits and holds qualified contributions and any income
10 derived from qualified contributions in an account that is separate from
11 the organization's operating or other funds until such qualified
12 contributions or income are withdrawn for use, and (vi) is approved to
13 receive authorized contributions and issue certificates of receipt
14 pursuant to article twenty-five of the education law.
15 5. "Eligible pupil" means a child who (i) is a resident, (ii) is of
16 school age in accordance with subdivision one of section thirty-two
17 hundred two of the education law or who is four years of age on or
18 before December first of the year in which such child is enrolled in a
19 pre-kindergarten program, (iii) attends or is about to attend a quali-
20 fied school, and (iv) resides in a household that has a federal adjusted
21 gross income of two hundred fifty thousand dollars or less, provided
22 however, for households with three or more dependent children, such
23 income level shall be increased by ten thousand dollars per dependent
24 child, not to exceed three hundred thousand dollars.
25 6. "Local education fund" means a not-for-profit entity which (i) is
26 exempt from taxation under paragraph three of subsection (c) of section
27 five hundred one of the internal revenue code, (ii) is established for
28 the purpose of supporting at least one public school or a public school
29 district, (iii) uses at least ninety percent of the qualified contrib-
30 utions received during the calendar year and any income derived from
31 such qualified contributions to support the public school or schools or
32 public school district or districts that such fund has been established
33 to support, (iv) deposits and holds qualified contributions and any
34 income derived from qualified contributions in an account that is sepa-
35 rate from the fund's operating or other funds until such qualified
36 contributions or income are withdrawn for use, and (v) is approved to
37 receive authorized contributions and issue certificates of receipt
38 pursuant to article twenty-five of the education law.
39 7. "Non-public school" means any not-for-profit pre-kindergarten
40 program or elementary or secondary sectarian or nonsectarian school
41 located in this state, other than a public school, that provides
42 instruction at one or more locations to students in accordance with
43 subdivision two of section thirty-two hundred four of the education law.
44 8. "Public education entity" means a public school or a public school
45 district, provided that such public school or public school district (i)
46 deposits and holds qualified contributions and any income derived from
47 such qualified contributions in an account that is separate from the
48 public school or public school district's operating or other funds until
49 such qualified contributions or income are withdrawn for use and (ii) is
50 approved to issue certificates of receipt pursuant to article twenty-
51 five of the education law.
52 9. "Public school" means any free elementary or secondary school in
53 this state pursuant to article eleven of the constitution, but shall not
54 include a charter school authorized by article fifty-six of the educa-
55 tion law.

A. 1826--D 4
1 10. "Qualified contribution" means the authorized contribution made by
2 a taxpayer to a public education entity, school improvement organiza-
3 tion, local education fund, or educational scholarship organization for
4 which the contribution authorization certificate has been issued to the
5 taxpayer for which the taxpayer has received a certificate of receipt
6 from such entity, fund or organization.
7 11. "Qualified educator" means an individual who is a teacher or
8 instructor in a qualified school for at least nine hundred hours during
9 a school year.
10 12. "Qualified school" means a public school or non-public school
11 located in this state.
12 13. "Scholarship" means an educational scholarship or tuition grant
13 awarded to an eligible pupil to attend a qualified school in an amount
14 not to exceed the tuition charged to attend such school less any other
15 educational scholarship or tuition grant received by such eligible pupil
16 or his or her parent, parents, legal guardian, or legal guardians for
17 such eligible pupil's tuition; provided, however, in the case of an
18 eligible pupil attending a public school in a district of which such
19 pupil is not a resident, the amount of the educational scholarship or
20 tuition grant awarded may not exceed the tuition charged by the public
21 school pursuant to paragraph d of subdivision four of section thirty-two
22 hundred two of the education law, but only if the school district of
23 which such pupil is a resident is not required to pay for such tuition.
24 14. "School improvement organization" means a not-for-profit entity
25 which (i) is exempt from taxation under paragraph three of subsection
26 (c) of section five hundred one of the internal revenue code, (ii) uses
27 at least ninety percent of the qualified contributions received during
28 the calendar year and any income derived from qualified contributions
29 during such months to assist public schools or public school districts
30 located in this state in their provision of educational programs, either
31 by making contributions to one or more public schools or public school
32 districts located in this state or providing educational programs to, or
33 in conjunction with, one or more public schools or public school
34 districts located in this state, (iii) deposits and holds qualified
35 contributions and any income derived from qualified contributions in an
36 account that is separate from the organization's operating or other
37 funds until such qualified contributions or income are withdrawn for
38 use, and (iv) is approved to issue certificates of receipt pursuant to
39 article twenty-five of the education law. Such term includes a pre-kin-
40 dergarten program or not-for-profit entity that allows the taxpayer to
41 choose to donate to a program, project or initiative identified by a
42 qualified educator for use in a public school.
43 (b) Allowance of credit. A taxpayer subject to tax under article
44 nine-A or twenty-two of this chapter shall be allowed an education
45 investment tax credit against such tax, pursuant to the provisions
46 referenced in subdivision (l) of this section, with respect to qualified
47 contributions made during the taxable year.
48 (c) Amount of credit. The amount of the credit shall be seventy-five
49 percent of the taxpayer's total qualified contributions, capped at one
50 million dollars. A taxpayer that is a partner in a partnership, member
51 of a limited liability company or shareholder in an S corporation shall
52 be allowed to claim its pro rata share of the credit earned by the part-
53 nership, limited liability company or S corporation, provided that such
54 a taxpayer shall not claim credit in excess of the limit imposed by this
55 subdivision.

A. 1826--D 5
1 (d) Information to be posted on the department's website. Beginning on
2 the sixteenth day of January of each year, the commissioner shall main-
3 tain on the department's website a running total of the amount of avail-
4 able credit for which taxpayers may apply pursuant to this section.
5 Such running total shall be updated on a daily basis. Additionally, the
6 commissioner shall maintain on the department's website a list of the
7 school improvement organizations, local education funds and educational
8 scholarship organizations approved to issue certificates of receipt
9 pursuant to article twenty-five of the education law. The commissioner
10 shall also maintain on the department's website a list of public educa-
11 tion entities, school improvement organizations, local education funds
12 and educational scholarship organizations whose approval to issue
13 certificates of receipt has been revoked along with the date of such
14 revocation.
15 (e) Applications for contribution authorization certificates. Prior to
16 making a contribution to a public education entity, school improvement
17 organization, local education fund, or educational scholarship organiza-
18 tion, the taxpayer shall apply to the department for a contribution
19 authorization certificate for such contribution. Such application shall
20 be in the form and manner prescribed by the department. The department
21 may allow taxpayers to make multiple applications on the same form,
22 provided that each contribution listed on such application shall be
23 treated as a separate application and that the department shall issue
24 separate contribution authorization certificates for each such applica-
25 tion.
26 (f) Contribution authorization certificates. 1. Issuance of certif-
27 icates. The commissioner shall issue contribution authorization certif-
28 icates in two phases. In phase one, which begins on the first day of
29 January and ends on the fifteenth day of January, the commissioner shall
30 accept applications for contribution authorization certificates but
31 shall not issue any such certificates. Commencing after the sixteenth
32 day of January, the commissioner shall issue contribution authorization
33 certificates for applications received during phase one, provided that
34 if the aggregate total of the contributions for which applications have
35 been received during phase one exceeds the amount of the credit cap in
36 subdivision (h) of this section, the authorized contribution amount
37 listed on each contribution authorization certificate shall equal the
38 pro-rata share of the credit cap. If the credit cap is not exceeded,
39 phase two commences on February first and ends on the December thirty-
40 first. The commissioner shall issue contribution authorization certif-
41 icates on a first-come first serve basis based upon the date the depart-
42 ment received the taxpayer's application for such certificate; provided,
43 however, that if on any day the department receives applications
44 requesting contribution authorization certificates for contributions
45 that in the aggregate exceed the amount of the credit cap on such day,
46 the authorized contribution amount listed in each contribution authori-
47 zation certificate shall be the taxpayer's pro-rata share of the credit
48 cap. For purposes of determining a taxpayer's pro-rata share of credit
49 cap, the commissioner shall multiply the amount of credit cap by a frac-
50 tion, the numerator of which equals the total contribution amount listed
51 on the taxpayer's application and the denominator of which equals the
52 aggregate amount of contributions listed on the applications for
53 contribution authorization certificates were received on such day.
54 Contribution authorization certificates for applications received during
55 phase one shall be mailed no later than the twentieth day of January.
56 Contribution authorization certificates for applications received during

A. 1826--D 6
1 phase two shall be mailed within five days of receipt of such applica-
2 tions. Provided, however, that no contribution authorization certif-
3 icates for applications received during phase two shall be issued until
4 all of the contribution authorization certificates for applications
5 received during phase one have been issued.
6 2. Contribution authorization certificate contents. Each contribution
7 authorization certificate shall state (i) the date such certificate was
8 issued, (ii) the date by which the authorized contributions listed in
9 the certificate must be made, which shall be no later than November
10 thirtieth of the year for which the contribution authorization certif-
11 icate was issued, (iii) the taxpayer's name and address, (iv) the amount
12 of authorized contributions, (v) the contribution authorization certif-
13 icate's certificate number, (vi) the name and address of the public
14 education entity, school improvement organization, local education fund
15 or educational scholarship organization for which the taxpayer may make
16 the authorized contribution, and (vii) any other information that the
17 commissioner deems necessary.
18 3. Notification of the issuance of a contribution authorization
19 certificate. Upon issuance of a contribution authorization certificate,
20 the commissioner shall notify the educational scholarship organization,
21 public education entity, school improvement organization or local educa-
22 tion fund of the issuance of the contribution authorization certificate
23 to a taxpayer. Such notification shall include (i) the taxpayer's name
24 and address, (ii) the date such certificate was issued, (iii) the date
25 by which the authorized contribution listed in the notification must be
26 made by the taxpayer, (iv) the amount of the authorized contribution,
27 (v) contribution authorization certificate, and (vi) any other informa-
28 tion that the commissioner deems necessary.
29 (g) Certificate of receipt. 1. In general. No public education entity,
30 school improvement organization, local education fund, or educational
31 scholarship organization shall issue a certificate of receipt for any
32 contribution made by a taxpayer unless such public education entity,
33 school improvement organization, local education fund, or educational
34 scholarship organization has been approved to issue certificates of
35 receipt pursuant to article twenty-five of the education law. No public
36 education entity, school improvement organization, local education fund,
37 or educational scholarship organization shall issue a certificate of
38 receipt for a contribution made by a taxpayer unless such public educa-
39 tion entity, school improvement organization, local education fund, or
40 educational scholarship organization has received notice from the
41 department that the department issued a credit authorization certificate
42 to the taxpayer for such contribution.
43 2. Timely contribution. If a taxpayer makes an authorized contribution
44 to the public education entity, school improvement organization, local
45 education fund, or educational scholarship organization set forth on the
46 authorization certificate issued to the taxpayer no later than the date
47 by which such authorized contribution is required to be made, such
48 public education entity, school improvement organization, local educa-
49 tion fund, or educational scholarship organization shall, within thirty
50 days of receipt of the authorized contribution, issue to the taxpayer a
51 written certificate of receipt; provided, however, that if the taxpayer
52 contributes an amount that is less than the amount listed on the taxpay-
53 er's contribution authorization certificate, the taxpayer shall not be
54 issued a certificate of receipt for such contribution.
55 3. Certificate of receipt contents. Each certificate of receipt shall
56 state (i) the name and address of the issuing public education entity,

A. 1826--D 7
1 school improvement organization, local education fund, or educational
2 scholarship organization, (ii) the taxpayer's name and address, (iii)
3 the date for each contribution, (iv) the amount of each contribution and
4 the corresponding contribution authorization certificate number, (v) the
5 total amount of contributions, and (vi) any other information that the
6 commissioner may deem necessary.
7 4. Notification to the department for the issuance of a certificate of
8 receipt. Upon the issuance of a certificate of receipt, the issuing
9 public education entity, school improvement organization, local educa-
10 tion fund, or educational scholarship organization shall, within thirty
11 days of issuing the certificate of receipt, provide the department with
12 notification of the issuance of such certificate in the form and manner
13 prescribed by the department.
14 5. Notification to the department of the non-issuance of a certificate
15 of receipt. Each public education entity, school improvement organiza-
16 tion, local education fund, or educational scholarship organization that
17 received notification from the department pursuant to subdivision (d) of
18 this section regarding the issuance of a contribution authorization
19 certificate to a taxpayer shall, within thirty days of the expiration
20 date for such authorized contribution, provide notification to the
21 department for each taxpayer that failed to make the authorized contrib-
22 ution to such public education entity, school improvement organization,
23 local education fund, or educational scholarship organization in the
24 form and manner prescribed by the department.
25 6. Failure to notify the department. Within thirty days of discovery
26 of the failure of any public education entity, school improvement organ-
27 ization, local education fund, or educational scholarship organization
28 to comply with the notification requirements prescribed by paragraphs
29 four and five of this subdivision, the commissioner shall issue a notice
30 of compliance failure to such entity, program fund or organization. Such
31 entity, program fund or organization shall have thirty days from the
32 date of such notice to make the notifications prescribed by paragraphs
33 four and five of this subdivision. Such period may be extended for an
34 additional thirty days upon the request of the entity, program fund or
35 organization. Upon the expiration of the period for compliance set forth
36 in the notice prescribed by this paragraph, the commissioner shall noti-
37 fy the board of regents and the commissioner of education that such
38 entity, program fund or organization failed to make the notifications
39 prescribed by paragraphs four and five of this subdivision.
40 (h) Credit cap. The maximum permitted credits under this section
41 available to all taxpayers for qualified contributions for calendar year
42 two thousand fifteen shall be one hundred fifty million dollars. In
43 calendar year two thousand sixteen, the maximum permitted credits under
44 this section available to all taxpayers shall be two hundred twenty-five
45 million dollars plus any amounts that are required to be added to the
46 cap pursuant to subdivision (i) of this section. For calendar year two
47 thousand seventeen and each calendar year thereafter, the maximum
48 permitted credits under this section available to all taxpayers shall be
49 three hundred million dollars, plus any amounts that are required to be
50 added to the cap pursuant to subdivision (i) of this section. The maxi-
51 mum permitted credits under this section for qualified contributions
52 shall be allocated fifty percent to public education entities, school
53 improvement organizations, and local education funds and fifty percent
54 to educational scholarship organizations.
55 (i) Additions to the credit cap. Unissued certificates of receipt. Any
56 amounts for which the department receives notification of non-issuance

A. 1826--D 8
1 of a certificate of receipt shall be added to the cap prescribed in
2 subdivision (h) of this section for the immediately following year.
3 (j) Other requirements; miscellaneous. 1. Record keeping. Each taxpay-
4 er shall, for each taxable year for which the education investment tax
5 credit provided for under this section is claimed, maintain records of
6 the following information: (i) contribution authorization certificates
7 obtained pursuant to subdivision (f) of this section, and (ii) certif-
8 icates of receipt obtained pursuant to subdivision (g) of this section.
9 2. Regulations. The commissioner is hereby authorized to promulgate
10 and adopt on an emergency basis regulations necessary for the implemen-
11 tation of this section.
12 (k) Reports. 1. Reports to the commissioner. On or before the last day
13 of January for each calendar year, each public education entity, school
14 improvement organization, local education fund, and educational scholar-
15 ship organization that issued one or more certificates of receipt shall
16 report to the commissioner the number of such certificates issued and
17 the aggregate amount of qualified contributions made to such entity,
18 fund, or organization during the immediately preceding calendar year.
19 2. Joint annual report. On or before the last day of May for each
20 calendar year, for the immediately preceding year, the commissioner and
21 the commissioner of education shall jointly submit a written report to
22 the governor, the temporary president of the senate, the speaker of the
23 assembly, the chairman of the senate finance committee and the chairman
24 of the assembly ways and means committee regarding the credit. Such
25 report shall contain information for articles nine-A and twenty-two,
26 respectively, regarding: (i) the number of applications received; (ii)
27 the number of and aggregate value of the contribution authorization
28 certificates issued for contributions to public education entities,
29 school improvement organizations, local education funds, and scholarship
30 organizations, respectively; (iii) the geographical distribution by
31 county of (A) the applications for contribution authorization certif-
32 icates, distribution by county of (B) the public education entities,
33 school improvement organizations, local education funds, and educational
34 scholarship organizations listed on the issued contribution authori-
35 zation certificates; and (iv) information, including geographical
36 distribution by county, of the number of eligible pupils that received
37 scholarships, the number of qualified schools attended by eligible
38 pupils that received such scholarships, and the average value of schol-
39 arships received by such eligible pupils. The commissioner and desig-
40 nated employees of the department, the board of regents and all members
41 of the board of regents, including the commissioner of education and
42 designated employees of the department of education, shall be allowed
43 and are directed to share and exchange information regarding the school
44 improvement organizations, local education funds and educational schol-
45 arship organizations that applied for approval to be authorized to
46 receive qualified contributions; and the public education entities,
47 school improvement organizations, local education funds, and educational
48 scholarship organizations authorized to issue certificates of receipt,
49 including information contained in or derived from application forms and
50 reports submitted to the department of education or board of regents.
51 (l) Cross references. For application of the credit provided for in
52 this section, see the following provisions of this chapter:
53 1. Article 9-A: section 210; subdivision 48;
54 2. Article 22: section 606; subsections (i) and (xx).
55 § 4. Paragraph (b) of subdivision 9 of section 208 of the tax law is
56 amended by adding a new subparagraph 21 to read as follows:

A. 1826--D 9
1 (21) The amount of any deduction allowed pursuant to section one
2 hundred seventy of the internal revenue code for which credit is claimed
3 pursuant to subdivision forty-eight of section two hundred ten of this
4 article.
5 § 5. Section 210 of the tax law is amended by adding a new subdivision
6 48 to read as follows:
7 48. Education investment tax credit. (a) Allowance of credit. A
8 taxpayer shall be allowed a credit, to be computed as provided in
9 section forty-one of this chapter, against the tax imposed by this arti-
10 cle.
11 (b) Application of credit. The credit allowed under this subdivision
12 for any taxable year shall not reduce the tax due for that year to less
13 than the higher of the amounts prescribed in paragraphs (c) or (d) of
14 subdivision one of this section. However, if the amount of credit
15 allowed under this subdivision for qualified contributions for any taxa-
16 ble year reduces the tax to such amount, any amount of credit thus not
17 deductible in such taxable year may be carried over to the succeeding
18 five years and may be deducted from the taxpayer's tax for such year or
19 years.
20 § 6. Subparagraph (B) of paragraph 1 of subsection (i) of section 606
21 of the tax law is amended by adding a new clause (xxxvii) to read as
22 follows:
23 (xxxvii) Education investmentAmount of credit under subdivision
24 tax credit under subsection (xx)forty-eight of section two hundred
25 ten
26 § 7. Section 606 of the tax law is amended by adding a new subsection
27 (w) to read as follows:
28 (w) Instructional materials and supplies credit. (1) For taxable years
29 beginning on and after January first, two thousand fifteen, a taxpayer
30 shall be allowed a credit in the amount paid by the taxpayer during the
31 taxable year for instructional materials and supplies with respect to
32 classroom based instruction in a qualified school, or two hundred
33 dollars, whichever is less; provided that the taxpayer is a teacher or
34 instructor in a qualified school, as defined in section forty-one of
35 this chapter, for at least nine hundred hours during a school year. For
36 purposes of this subsection, the term "materials and supplies" means
37 amounts paid for instructional materials or supplies that are designated
38 for classroom use in any qualified school.
39 (2) A husband and wife who file separate returns for a taxable year in
40 which they could have filed a joint return may each claim only one-half
41 of the tax credit that would have been allowed for a joint return.
42 (3) If the amount of the credit allowed under this subsection for any
43 taxable year shall exceed the taxpayer's tax for such year, the excess
44 shall be treated as an overpayment of tax to be credited or refunded in
45 accordance with the provisions of section six hundred eighty-six of this
46 article, provided, however, that no interest shall be paid thereon.
47 § 8. Subsections (yy) and (zz) of section 606 of the tax law, as
48 relettered by section 5 of part H of chapter 1 of the laws of 2003 are
49 relettered subsections (yyy) and (zzz) and a new subsection (xx) is
50 added to read as follows:
51 (xx) Education investment tax credit. (1) Allowance of credit. A
52 taxpayer shall be allowed a credit to be computed as provided in section
53 forty-one of this chapter, against the tax imposed by this article.
54 (2) Application of credit. If the amount of the credit allowed under
55 this subsection for any qualified contributions for any taxable year
56 exceeds the taxpayer's tax for such year, the excess may be carried over

A. 1826--D 10
1 to the succeeding five years and may be deducted from the taxpayer's tax
2 for such year or years.
3 § 9. Subsection (c) of section 615 of the tax law is amended by adding
4 a new paragraph 9 to read as follows:
5 (9) The amount of any federal deduction for contributions made for
6 which a taxpayer claims a credit under subsection (kk) of section six
7 hundred six of this article.
8 § 10. The education law is amended by adding a new article 25 to read
9 as follows:
10 ARTICLE 25
11 EDUCATION INVESTMENT TAX CREDIT PROGRAM
12 Section 1209. Short title.
13 1210. Definitions.
14 1211. Approval to issue certificates of receipt.
15 1212. Applications for approval to issue certificates of
16 receipt.
17 1213. Application approval.
18 1214. Revocation of approval to issue certificates of receipt.
19 1215. Reporting and recordkeeping.
20 1216. Joint annual report.
21 1217. Commissioner; powers.
22 § 1209. Short title. This article shall be known and may be cited as
23 the "education investment tax credit program".
24 § 1210. Definitions. As used in this article, the following terms
25 shall have the following meanings:
26 1. "Authorized contribution" means the contribution amount listed on
27 the contribution authorization certificate issued to a taxpayer.
28 2. "Contribution" means a donation paid by cash, check, electronic
29 funds transfer, debit card or credit card made by the taxpayer during
30 the tax year.
31 3. "Educational program" means an academic or similar program of a
32 public school that enhances the curriculum or academic program of the
33 public school, or provides a pre-kindergarten program to the public
34 school. For purposes of this definition, the instruction, materials,
35 programs or other activities offered by or through an educational
36 program may include, but are not limited to, the following features: (a)
37 instruction or materials promoting health, physical education, and fami-
38 ly and consumer sciences; literary, performing and visual arts; math-
39 ematics, social studies, technology and scientific achievement; (b)
40 instruction or programming to meet the education needs of at-risk
41 students or students with disabilities, including tutoring or coun-
42 seling; or (c) use of specialized instructional materials, instructors
43 or instruction not provided by a public school.
44 4. "Educational scholarship organization" means a not-for-profit enti-
45 ty which (i) is exempt from taxation under paragraph three of subsection
46 (c) of section five hundred one of the internal revenue code, (ii) uses
47 or designates at least ninety percent of the revenue from qualified
48 contributions received during the calendar year and any income derived
49 from qualified contributions for scholarships, (iii) provides more than
50 fifty percent of its scholarships during a calendar year to eligible
51 pupils who reside in a household that has an income not to exceed one
52 hundred fifty percent of the income qualification required for the
53 reduced price school lunches under the National School Lunch Act,
54 provided however for the purposes of an educational scholarship organ-
55 ization fulfilling such requirement, an educational scholarship organ-
56 ization may enter into an agreement with another educational scholarship

A. 1826--D 11
1 organization or organizations to jointly report their scholarship infor-
2 mation to meet such requirement; (iv) deposits and holds qualified
3 contributions and any income derived from qualified contributions in an
4 account that is separate from the organization's operating or other
5 funds until such qualified contributions or income are withdrawn for
6 use, and (v) provides scholarships to eligible pupils for use at not
7 fewer than three qualified schools.
8 5. "Eligible pupil" means a child who (i) is a resident of this state,
9 (ii) is school age in accordance with subdivision one of section thir-
10 ty-two hundred two of this chapter or who is four years of age on or
11 before December first of the year in which they are enrolled in a pre-
12 kindergarten program, (iii) attends or is about to attend a qualified
13 school, and (iv) resides in a household which has a federal adjusted
14 gross income of two hundred fifty thousand dollars or less, provided
15 however, for households with three or more dependent children, such
16 income level shall be increased by ten thousand dollars per dependent
17 child, not to exceed three hundred thousand dollars.
18 6. "Local education fund" means a not-for-profit entity which (i) is
19 exempt from taxation under paragraph three of subsection (c) of section
20 five hundred one of the internal revenue code, (ii) is established for
21 the purpose of supporting at least one public school, or a public school
22 district, (iii) uses at least ninety percent of the qualified contrib-
23 utions received during the calendar year and any income derived from
24 such qualified contributions to support the public school or schools or
25 public school district or districts that such fund has been established
26 to support, and (iv) deposits and holds qualified contributions and any
27 income derived from qualified contributions in an account that is sepa-
28 rate from the fund's operating or other funds until such qualified
29 contributions or income are withdrawn for use.
30 7. "Nonpublic school" means any not-for-profit pre-kindergarten
31 program or elementary, secondary sectarian or nonsectarian school, other
32 than a public school, that is providing instruction at one or more
33 locations to an eligible pupil in accordance with subdivision two of
34 section thirty-two hundred four of this chapter.
35 8. "Public education entity" means a public school district or a
36 public school, provided that such public school district or public
37 school deposits and holds qualified contributions and any income derived
38 from qualified contributions in an account that is separate from the
39 public school or public school district's operating or other funds until
40 such qualified contributions or income are withdrawn for use from oper-
41 ating or other funds and is approved to receive authorized contributions
42 and issue certificates of receipt pursuant to this article.
43 9. "Public school" means any free elementary or secondary school in
44 this state pursuant to article eleven of the New York constitution, but
45 shall not include a charter school authorized by article fifty-six of
46 this chapter.
47 10. "Qualified contribution" means the authorized contribution made by
48 a taxpayer to a public education entity, local education fund, school
49 improvement district or educational scholarship organization that is
50 listed on the contribution authorization certificate issued to the
51 taxpayer and for which the taxpayer has received a certificate of
52 receipt from such entity, fund, or organization.
53 11. "Qualified educator" means an individual who is a teacher or
54 instructor in a qualified school for at least nine hundred hours during
55 a school year.

A. 1826--D 12
1 12. "Qualified school" means a public school or nonpublic school
2 located in this state.
3 13. "Scholarship" means an educational scholarship or tuition grant
4 awarded to an eligible pupil to attend a qualified school in an amount
5 not to exceed the tuition charged to attend such school less any other
6 educational scholarship or tuition grant received by such eligible pupil
7 or his or her parent, parents, legal guardian or legal guardians for
8 such eligible pupil's tuition; provided, however, in the case of an
9 eligible pupil attending a public school in a district of which such
10 pupil is not a resident, the amount of the educational scholarship or
11 tuition grant awarded may not exceed the tuition charged by the public
12 school pursuant to paragraph d of subdivision four of section thirty-two
13 hundred two of this chapter less any other educational scholarship or
14 tuition grant received by such eligible pupil or his or her parent,
15 parents, legal guardian or legal guardians for such eligible pupil's
16 tuition, but only if the school district of which such pupil is a resi-
17 dent is not required to pay for such tuition.
18 14. "School improvement organization" means a not-for-profit entity
19 that (i) is exempt from taxation under paragraph three of subsection (c)
20 of section five hundred one of the internal revenue code, (ii) uses at
21 least ninety percent of the qualified contributions received during the
22 calendar year and any income derived from qualified contributions during
23 such months to assist public schools or public school districts located
24 in this state in their provision of educational programs, either by
25 making contributions to one or more public schools or public school
26 districts located in this state or providing educational programs to, or
27 in conjunction with, one or more public schools or public school
28 districts located in this state, (iii) deposits and holds qualified
29 contributions and any income derived from qualified contributions in an
30 account that is separate from the organization's operating or other
31 funds until such qualified contributions or income are withdrawn for
32 use, and (iv) is approved to issue certificates of receipt pursuant to
33 this article. Such term includes a pre-kindergarten program or not-for-
34 profit entity that allows the taxpayer to choose to donate to a program,
35 project or initiative identified by a qualified educator for use in a
36 public school.
37 § 1211. Approval to issue certificates of receipt. 1. Public schools
38 and public school districts. All public schools and public school
39 districts shall be approved to issue certificates of receipt provided,
40 that a public school or public school district shall not be approved if
41 either (i) such public school or public school district fails to deposit
42 and hold qualified contributions and any income derived from qualified
43 contributions in an account that is separate from the school or school
44 district's operating or other funds until such qualified contributions
45 or income are withdrawn for use, or (ii) the board of regents has
46 revoked such approval for such public school or public school district
47 pursuant to section twelve hundred fourteen of this article.
48 2. School improvement organizations, educational scholarship organiza-
49 tions and local education funds. No school improvement organization,
50 educational scholarship organization or local education fund shall issue
51 any certificates of receipt without filing an application pursuant to
52 section twelve hundred twelve and receiving approval pursuant to section
53 twelve hundred thirteen of this article.
54 § 1212. Applications for approval to issue certificates of receipt.
55 Each school improvement organization, educational scholarship organiza-
56 tion and local education fund shall submit an application to the board

A. 1826--D 13
1 of regents for approval to issue certificates of receipt in the form and
2 manner prescribed by the board of regents, provided that such applica-
3 tion shall include: (1) submission of documentation that such school
4 improvement organization, local education fund or educational scholar-
5 ship organization has been granted exemption from taxation under para-
6 graph three of subsection (c) of section five hundred one of the inter-
7 nal revenue code; (2) a list of names and addresses of all members of
8 the governing board of the school improvement organization, local educa-
9 tion fund or educational scholarship organization; and (3) an educa-
10 tional scholarship organization shall provide criteria for the awarding
11 of scholarships to eligible students.
12 § 1213. Application approval. 1. In general. The board of regents
13 shall review each application to issue certificates of receipt pursuant
14 to this article. Approval or denial of an application shall be made at
15 the next scheduled meeting of the board of regents that follows receipt
16 of such application, provided, however that if it is not practicable for
17 the board to review an application that is received less than three days
18 before a scheduled meeting, the board shall approve or deny such an
19 application at the immediately following scheduled meeting.
20 2. Notification. Applicants shall be notified of the board of regents'
21 determination within three business days of the board's determination.
22 § 1214. Revocation of approval to issue certificates of receipt. The
23 board of regents, in consultation with the commissioner of taxation and
24 finance, may revoke the approval of a school improvement organization,
25 educational scholarship organization, local education fund, public
26 school or public school district to issue certificates of receipt upon a
27 finding that such organization, fund, school or school district has
28 violated this article or section forty-one of the tax law. These
29 violations shall include, but not be limited to, any of the following:
30 (1) failure to meet the requirements of this article or section forty-
31 one of the tax law, (2) the failure to maintain full and adequate
32 records with respect to the receipt of qualified contributions, (3) the
33 failure to supply such records to the commissioner, department of taxa-
34 tion and finance, the department or the board of regents when requested
35 by the department or board, or (4) the failure to provide notice to the
36 department of taxation and finance of the issuance or non-issuance of
37 certificates of receipt pursuant to section forty-one of the tax law;
38 provided, however, that the board of regents shall not revoke approval
39 pursuant to this section based upon a violation of tax law unless the
40 commissioner of taxation and finance agrees that revocation is
41 warranted; and provided further that the board of regents shall not
42 revoke approval pursuant to this section when the failure to comply is
43 due to clerical error and not negligence or intentional disregard for
44 the law. Within five days of the determination revoking approval, the
45 commissioner shall provide notice of such revocation to the educational
46 scholarship organization, school improvement organization, local educa-
47 tion fund, public school, or public school district and to the depart-
48 ment of taxation and finance.
49 § 1215. Reporting and recordkeeping. 1. Reporting. Each educational
50 scholarship organization, school improvement organization, local educa-
51 tion fund, public school and public school district that receives quali-
52 fied contributions shall report to the commissioner and the board of
53 regents by January thirty-first of each calendar year. Such report shall
54 be in the form and manner prescribed by the commissioner in consultation
55 with the board of regents.

A. 1826--D 14
1 2. Recordkeeping. Each educational scholarship organization, school
2 improvement organization, local education fund, public school and public
3 school district that issued at least one certificate of receipt shall
4 maintain records including (a) notifications received from the depart-
5 ment of taxation and finance, (b) notifications made to the department
6 of taxation and finance, (c) copies of qualified contributions received,
7 (d) copies of the deposit of such qualified contributions, (e) copies of
8 issued certificates of receipt, (f) annual financial statements, (g) in
9 the case of school improvement organizations, educational scholarship
10 organizations and local education funds, the application submitted
11 pursuant to section twelve hundred twelve of this article and the
12 approval issued by the board of regents, and (h) any other information
13 as prescribed by regulation promulgated by the commissioner or rule
14 promulgated by the board of regents.
15 § 1216. Joint annual report. On or before the last day of May for each
16 calendar year, the commissioner of taxation and finance and the commis-
17 sioner, jointly, shall submit a written report as provided in paragraph
18 two of subdivision (k) of section forty-one of the tax law.
19 § 1217. Commissioner; powers. The commissioner shall promulgate on an
20 emergency basis regulations necessary for the implementation of this
21 section. The commissioner shall make any application required to be
22 filed pursuant to this article available to applicants within sixty days
23 of the effective date of this article.
24 § 11. The education law is amended by adding a new section 1503-a to
25 read as follows:
26 § 1503-a. Power to accept and solicit gifts and donations. 1. All
27 school districts organized by special laws or pursuant to the provisions
28 of a general law are hereby authorized and empowered to accept gifts,
29 donations, and contributions to the district and to solicit the same.
30 2. Notwithstanding any other provision of this chapter or of any other
31 general or special law to the contrary, the receipt of such gifts,
32 donations, contributions and other funds, and any income derived there-
33 from, shall be disregarded for the purposes of all apportionments,
34 computations, and determinations of state aid.
35 § 12. Severability. If any provision of this section or the applica-
36 tion thereof to any person or circumstances is held invalid, such inva-
37 lidity shall not affect other provisions or applications of the section
38 which can be given effect without the invalid provision or application,
39 and to this end the provisions of this section are declared to be sever-
40 able.
41 § 13. This act shall take effect immediately and shall apply to taxa-
42 ble years beginning after December 31, 2014.